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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (40288)	10/1/2003 1:53:07 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70930

TradingMarkets.com How To Short An Oversold Market Tuesday September 30, 6:24 pm ET By Dave Landry Looking to the indices, on Tuesday, the Nasdaq (NasdaqSC:^IXIC - News) opened weaker and sold off hard in early trading. It found its low fairly quickly and began to claw its way back up. However, the selling resumed late in the day. This action has it closing poorly and right at its 50-day moving average.. The S&P (CBOE:^SPX - News) put in a somewhat similar performance. This action puts it back below its 50-day moving average. Looking to the sectors, virtually all of technology looks like it has the potential to make another thrust down from either First Thrusts or topping formations (double tops, head and shoulders tops, inverted cups etc...). This includes (but not limited to): biotech, software, computer hardware, semis, and telecom (except wireless). Outside of tech, the cyclicals remain weak and also look poised to continue their break down. As does gold. So what do we do? Tonight (Tuesday), my database has generated more transitional short setups than I have seen in months. Combine with the aforementioned poor sector action and sure seems that the obvious play would be on the short side. However, since the market sold off on Tuesday instead of rallying (like I thought it would), it's now further back into the oversold column. This could make shorting a little dicey. Therefore, look for shorting opportunities but keep it light and focus on issues that have pulled back (i.e.,those that aren't oversold like the indices). You might also consider balancing out the potential positions (i.e. hedging) with a long side trade in the index shares if they show signs of reversing. Looking to potential setups, for those with big ones*, super volatile Chinese Internet provider Netease.com (NasdaqNM:NTES - News) looks like it has the potential to resume its recent slide out out of a First Thrust. Northrop Grumman (NYSE:NOC - News), mentioned Monday night, still looks poised to resume its meltdown out of a pullback (as do many other stocks within this sector). Best of luck with your trading on Wednesday! Dave Landry P.S. Reminder: Protective stops on every trade!